Amir Fadavi, senior director with K2 Integrity, advises on the risks that supply chains face today in complying with a growing number of trade regulations and restrictions.

Two major issues dominate the trade restrictions being imposed on global supply chains today, Fadavi says: Russia’s invasion of Ukraine, and China. In the case of the former, the goal is to prevent Russia from acquiring the revenue it needs to continue the war. So manufacturers are being pressured to shift supply from regions that don’t benefit Russia.

China is less of an immediate problem, although manufacturers and buyers must take care not to be obtaining goods from regions of the country that are employing forced labor or otherwise violating the human rights of workers.

Anti-money laundering regulations target the financial side of product purchases and movements. To avoid being affected by them, companies should know who is behind every trade transaction.

The same goes for complying with laws intended to prevent the financing of terrorism. In this case, buyers must ensure that they’re not doing business with terrorist groups.

Economic sanctions generally, especially those imposed by the U.S., U.K. and European Union, are the number-one issue for global traders today, Fadavi says. Once the concern solely of financial institutions, they’re now a priority for all global businesses. Companies need to ensure that they’re not violating sanctions in both directions within their supply chains — upstream to multiple tiers of suppliers, and downstream to customers, especially when it comes to resale or re-export to third parties. 

Fadavi stresses the important of conducting due diligence in vetting suppliers and customers throughout the supply chain. Ignorance, he adds, is no excuse. Knowledge of illegal actions by a subcontractor, for instance, “is not required for a violation to take place.”